Labor Force Statistics from the Current Population Survey

Current Employment Statistics - CES (National)

A Profile of the Working Poor, 1997

A Profile of the Working Poor, 1997
U.S. Department of Labor
Bureau of Labor Statistics
August 1999
Report 936

In 1997, 35.6 million persons, 13.3 percent of the population, lived at or below the official poverty level. Although
the Nations poor were primarily children and adults who were not in the labor force, 21.0 percent, or 7.5 million
persons were classified as working poor. This level was about the same as in 1996. The working poor, as defined
for this analysis, are individuals who spent at least 27 weeks in the labor force (working or looking for work), but
whose income fell below the official poverty threshold. The poverty rate—the ratio of the working poor to all
persons in the labor force for at least 27 weeks—was 5.7 percent, little changed from 1996. (See table A.)
A majority of the working poor (58.1 percent) usually worked full time (35 hours or more a week),
although full-time work substantially lowers a persons probability of being poor. Among persons in the labor force
for 27 weeks or more, the poverty rate for those usually employed full time was 4.0 percent compared with 11.9
percent for usual part-time workers. Only 6.8 percent of the working poor actively searched for a job for more than 6
months in 1997 but did not find work. (See table 1.)

This report presents data on the relationships between labor force activity and poverty in 1997 for
individual workers and their families. The data were collected in the March 1998 supplement to the Current
Population Survey, a nationwide monthly survey of about 50,000 households conducted by the Bureau of the Census
for the Bureau of Labor Statistics. For a detailed description of the source of the data and an explanation of the
concepts and definitions used in this report, see the Technical Note.

Although employment status is a characteristic of an individual, poverty status is defined in terms of a
family unit. Thus, earnings from someone's employment are only one factor in that person's poverty status; the
earnings of others in the family and the presence of dependents are also important. For example, working wives
were less likely than working husbands to be poor (in aggregate) because working wives were more likely to be in
families with a second earner. On average in 1997, about 77 percent of married men worked for 27 weeks or more
compared with approximately 60 percent of married women. At the same earnings levels, women who headed
families are more likely to be poor than other women, because of either limited earnings from others in the family,
or because the presence of children raises the amount of income needed to live outside poverty.

In 1997, the poverty rate continued to be higher for working women than men—6.7 versus 4.9 percent. Moreover,
the proportion of working men living in poverty has edged down by 0.7 percentage point since 1995, while that for
women has shown little change. (See table 2.)

Although nearly three-fourths of the working poor were white workers, black and Hispanic workers
continued to experience poverty rates that were more than twice the rates of whites (11.5 and 12.5 percent versus 4.9
percent, respectively). Black working women had a poverty rate of 14.6 percent-almost twice the rate of black
working men (7.9 percent). The differences in the rates by sex were much smaller among whites and Hispanics. The
earnings differential between black women and men is small relative to whites, but black women are far more likely
than white women to head families alone.

Younger workers were most vulnerable to being poor. Teenagers (16- to 19-year-olds) and persons age 20
to 24 had poverty rates about twice the overall rate. Among blacks and Hispanic workers, the poverty rates for
teenagers were 23.2 and 20.1 percent, respectively.

Educational attainment

In general, the risk of living in poverty is lower for workers with more education. Of persons in the labor force for at
least half of 1997, those with less than a high school education had a much higher poverty rate (15.8 percent) than
high school graduates (6.5 percent). Workers with an associate degree or 4-year college degree reported the lowest
poverty rates, 3.1 and 1.5 percent, respectively. (See table 3.)

Although higher education lowers poverty rates among both blacks and whites, rates were about two times
higher for black workers than for white workers at all educational levels. Among black men and women, there were
marked disparities at all levels of education. The poverty rate for black women workers with less than a high school
education was 30.0 percent compared to 19.3 percent for black men. Among high school graduates, the poverty rate
of black women (17.6 percent) was more than twice that of black men (7.8 percent).

Occupation

During 1997, service and farm workers had the highest poverty rates, 12.1 and 16.0 percent, respectively. Persons
employed in managerial and professional specialty occupations had the lowest probability of being poor (1.8
percent). (See table 4.)

Household service workers (that is, housekeepers, child-care workers, and cooks), almost all of whom were
women, had a poverty rate of 22.3 percent. Protective service providers, such as firefighters, police officers, and
guards, reported a poverty rate of only 3.1 percent. The poverty rate among service providers other than private
household or protective-which includes occupations such as bartenders, waiters and waitresses, dental assistants,
janitors, and hairdressers-was 13.0 percent.

For persons employed in executive, administrative, and managerial occupations, managers of properties
and real estate, and food serving and lodging establishments had the highest poverty rates (5.4 and 4.2 percent,
respectively). Although 2.5 percentage points less than in 1996, pre-kindergarten and kindergarten teachers still had
a relatively high poverty rate (5.4 percent) among professional specialty occupations.
Among the other major occupational groups, sales workers and handlers, equipment cleaners, helpers, and
laborers also had relatively high poverty rates.

Family structure

In 1997, nearly 4.1 million families lived below the poverty level despite having at least one member in the labor
market for 27 weeks or more. Nearly half of these were families maintained by women. The poverty rate for
families—the ratio of poor families with workers to all families with workers—was 6.9 percent in 1997, little
changed from 1996. (See table 6.)

The poverty rate for families with just one member in the labor force was over seven times higher than that
of families with two or more members in the workforce (14.4 versus 1.9 percent). Families maintained by women
with only one member in the labor force were nearly two times more likely to be poor than were such families
maintained by men (25.8 versus 13.6 percent). Married-couple families with one member in the labor force had
lower poverty rates than families maintained by either women or men. This was true regardless of which member of
the married-couple family was in the labor force.

Working families with children, regardless of type of family, had higher poverty rates than families without
children. The difference was greatest among families maintained by women. Among these families, 27.0 percent of
those with children were poor compared to 4.9 percent of those without children.

Unrelated individuals

In 1997, 2.5 million unrelated individuals who were in the labor force for more than half the year lived below the
poverty level. Unrelated individuals are those persons who live by themselves or with others not related to them.
Their poverty rate was 9.7 percent in 1997, relatively unchanged from 1996. Among unrelated individuals, teenagers
were the most vulnerable to being poor. Nearly half of the working teenagers living on their own or with others not
related to them lived below the poverty level. (See table 7.)

Of the 2.5 million unrelated workers who lived below the poverty level, 63.6 percent lived with others.
These individuals reported a poverty rate two times higher than that of individuals who lived alone. Many unrelated
individuals in poverty may live with others out of necessity. Conversely, many of those who live alone do so
because they have sufficient incomes to support themselves. However, each person's resources determine unrelated
individuals' poverty status. The pooling of resources and sharing of expenses may allow some individuals in this
category, who are technically classified as poor, to live above the poverty level.

Labor market problems

The primary labor market problems associated with workers whose incomes fall below the poverty threshold include
unemployment, low earnings, and involuntary part-time employment, that is, wanting full-time work but having to
settle for part-time work. (See definitions in the Technical Note.) Among those who participated in the labor force
for more than half the year in 1997 and usually worked in full-time wage and salary positions, 3.7 million, or 3.7
percent, lived in poverty. (See table 8.) The following analysis of labor market problems is restricted to these full-
time wage and salary workers.

Low earnings continued to be the most common problem; about 7 in 10 poor workers were subject to low
earnings alone, or in combination with other labor market problems. Over 35 percent of the working poor
experienced unemployment, either alone or in combination with other problems. Only 6.2 percent of the working
poor experienced all three problems—low earnings, unemployment, and some involuntary part-time work.
Some 502,000 of these working poor, or 13.6 percent, did not experience any of the three labor market
problems in 1997. Their poverty status may be associated with other factors, including short-term employment,
some weeks of voluntary part-time work, or a family structure that increases the risk of poverty.

Technical Note

Source of data

The primary source of data in this report is the work experience and income supplement (called the Annual
Demographic Survey) to the March 1998 Current Population Survey (CPS). The CPS is a monthly survey of about
50,000 households conducted by the Bureau of the Census for the Bureau of Labor Statistics to collect demographic,
social, and economic information about persons 16 years of age and over. The work experience and income
information collected in the March supplement refers to activity in the entire prior calendar year.
Because the estimates are based on a sample, they may differ from the figures that would have been
obtained from a complete census using the same questionnaire and procedures. Sampling variability may be
relatively large in cases where the numbers are small. Thus, small estimates, or small differences between estimates,
should be interpreted with caution. For a detailed explanation of the March supplement to the Current Population
Survey, its sampling variability, and more complete definitions than those provided below, see Poverty in the United
States: 1997, Current Population Reports, Series P-60, No. 201 (Bureau of the Census, September 1998). This
publication also is available on the Bureau of the Census web site (http://www.census.gov).
Information in this report will be made available to sensory impaired individuals upon request. Voice
phone: (202) 606-7828; Federal Relay Service: 1-800-877-8339. This material is in the public domain and, with
appropriate credit, may be reproduced without permission.

Poverty classification. Poverty statistics presented in this report are based on definitions developed by the Social
Security Administration in 1964 and revised by Federal interagency committees in 1969 and 1981. These definitions
were originally based on the Department of Agricultures Economy Food Plan and reflected the different
consumption requirements of families based on factors such as family size and the number of children under 18
years of age.

The actual poverty thresholds vary in accordance with the makeup of the family. In 1997, the average
poverty threshold for a family of four was $16,400; for a family of nine or more persons, the threshold was $32,566;
and for an unrelated individual aged 65 and over, it was $7,698. The poverty thresholds are updated each year to
reflect changes in the Consumer Price Index for All Urban Consumers (CPI-U). The thresholds do not vary
geographically. For more information, see Poverty in the United States: 1997, cited above.

Low earnings. The low earnings level, as first developed in 1987, represented the average of the real value of the
minimum wage between 1967 and 1987 for a 40-hour week. The base year of 1967 was chosen because that was the
first year in which minimum-wage legislation covered essentially the same broad group of workers who are
currently covered. The low earnings level has subsequently been adjusted each year using the CPI-U so that the
measure maintains the same real value it held in 1987. In 1997, the low earnings threshold was $236.23 per week.
For a more complete definition, see Bruce W. Klein and Philip L. Rones, "A Profile of the Working Poor," Monthly
Labor Review, October 1989, pp. 3-13.

Income. Data on income are limited to money income received in the calendar year preceding the March survey date
before personal income taxes and payroll deductions. It does not include the value of noncash benefits such as food
stamps, medicare, medicaid, public housing, and employer-provided benefits. For a complete definition of the
income concept, see Poverty in the United States: 1997, cited above.

In the labor force. Persons in the labor force are those who worked or looked for work sometime during the
calendar year preceding the March survey date. The number of weeks in the labor force is accumulated over the
entire year. The focus in this report is on persons in the labor force for 27 weeks or more.

Involuntary part-time workers. These are persons who, in at least 1 week of the year, worked fewer than 35 hours
because of slack work or business conditions, or because they could not find full-time work. The number of weeks
of involuntary part-time work is accumulated over the year.

Occupation. Refers to the occupation in which a person worked the most weeks during the calendar year.

Unemployed. Unemployed persons are those who looked for work while not employed or those who were on layoff
from a job and expecting recall. The number of weeks unemployed is accumulated over the entire year.

Family. A family is defined as a group of two or more persons residing together who are related by birth, marriage,
or adoption. Persons in related subfamilies—married couples, or parent-child groups sharing the living quarters of
another family member—are included as members of that family and are not distinct family units. The count of
families used in this report does not include unrelated subfamilies, such as lodgers, guests, or resident employees
living in a household but not related to the householder (the person in whose name the housing unit is owned or
rented). Families are classified either as married-couple families or as those maintained by men or women without
spouses present. Family status is determined at the time of the March interview and thus may be different from that
of the previous year.

Unrelated individuals. These are persons who are not living with any relatives. Such individuals may be living
alone, reside in a non-related family household, or live in group quarters with other unrelated individuals.

Related children. Data on related children refer to own children (including sons, daughters, and step or adopted
children) of the husband, wife, or person maintaining the family and all other children related to the householder by
blood, marriage, or adoption.

Race. White, black, and other are terms used to describe the race of workers. Included in the other group are
American Indians, Alaskan Natives, and Asians and Pacific Islanders; because of their relatively small sample size,
data for this group are not separately tabulated or published.

Hispanic origin. This term refers to persons who identify themselves in the CPS enumeration process as Mexican,
Puerto Rican, Cuban, Central or South American, or of some other Hispanic origin or descent. Persons of Hispanic
origin may be of any race; thus, they also are included in both the white and black population groups.

. Gloria P. Goings, an economist in the Division of Labor Force Statistics, Bureau of Labor Statistics, prepared this report.